By JEFFREY SCHWARTZ

So what caused E-Trade Securities Inc.'s outages last week?

While company officials to date have been vague, the company's chief information officer, Debra Chrapaty, told InternetWeek that it was, ironically, a hardware upgrade intended to improve throughput that brought its trading system down for three consecutive mornings last week.

Company officials last week had initially blamed the outages on a software application upgrade gone awry.

However, the installation of memory channel adapters to its Compaq Alpha Servers caused some of the systems to fail, Chrapaty said. The Alpha servers run the trading application that functions as a gateway to Thomson Financial Co.'s BETA Systems, E-Trade's order clearing facility. Customer accounts and records, which are hosted on Sun Microsystems servers running Bea Systems' Tuxedo and Oracle databases, were not affected, Chrapaty said. Nor were the Netscape Application Servers, also housed on Sun hardware.

While Chrapaty said the failures never brought down E-Trade's site, customers were unable to perform trades during portions of each morning. "I obviously feel badly that it had a negative impact on my customers because I always want them to have a great experience when they come to E-Trade," Chrapaty said. "The intention was to improve that experience. It was well planned and it was implemented off production hours but it still had a negative impact."

E-Trade added the memory channel adapters in order to speed up the process by which customers receive confirmations of orders and trades. "We were hearing from our customers that one thing that would make their experience a lot better is if they could receive confirms more quickly," Chrapaty said.

As the upgrades were rolled out, the memory channels put more pressure on the CPUs, she added. "It created performance degradation in the application," she said. "What happened essentially is the CPU got overrun a little bit and it slowed down the application for a lot of our users. It was basically timing out so they couldn't access the application."

So why did E-Trade experience outages for three consecutive mornings? Initially, technicians thought the problem was within an application. The following day, they realized it was the memory channel issue. "Needless to say, problems while they seem obvious after you find them, are not always that easy to detect," Chrapaty said.

She pointed out that E-Trade makes more than 100 system and application updates per month, and last week's incident was the first major problem E-Trade has had in some time.

Indeed, with the flurry of changes online brokerages have to face to keep up with the huge growth spikes, occasional outages should be expected, said analysts.

Charles Schwab & Co. and Waterhouse Securities had their own outages in recent weeks.

On Monday, Ameritrade, the sixth largest online broker, went down for 28 minutes. An Ameritrade spokeswoman said that outage was caused by a failed communications link in the middleware between its trading systems and its back office systems. She did not elaborate other than to say Ameritrade brought the system down to rectify the problem, which hasn't occurred since.

These and other reported outages have been occurring at a time when transaction volumes are hitting stratospheric levels.

Nonetheless, last week's problems at E-Trade, the third largest online brokerage, did not lead Chrapaty to proclaim a need to re-architect its systems. "It was a one-off glitch in a very specific component of a very complex environment," she said. "I would need an environment as large as our entire operation to test every aspect. But I do believe we have a good test process, which is why over the past year we had one issue."